WASHINGTON -- The Concord Coalition today praised a bipartisan group of U.S. Senators for proposing to offset the revenue loss from a one-year extension of three expiring tax breaks. The proposal by Senators Snowe (R-ME), Baucus (D-MT), McCain (R-AZ), Breaux (D-LA), Chafee (R-RI) and Lincoln (D-AR) would extend through 2005 the 10 percent bracket inflation adjustment, certain “marriage penalty” provisions and an enhanced $1,000 child tax credit. The revenue loss would be offset by closing corporate tax loopholes that have been targeted by the Senate Finance Committee and by extending customs user fees.
“With the deficit expected to set a new record this year of more than $400 billion, extending these tax cuts in a deficit neutral manner would send a very positive signal that Congress is finally prepared to take the deficit seriously and make some hard choices among competing priorities. Finding offsets for these tax cuts could also act as a springboard for future negotiations on the more substantive goal of bringing the budget back into balance. Moreover, it would set a good precedent for the kind of bipartisan cooperation that is needed to restore fiscal responsibility,” said Concord Coalition executive director Robert Bixby.
“The push to find offsets is a prudent and reasonable response to dramatically changed circumstances. These tax cuts were originally enacted in 2001 on the assumptions that the nation would not be at war, that the Social Security surplus could still be set aside, and that even with a $1.3 trillion tax cut the public debt would be virtually eliminated by the end of the decade. All of those assumptions were wrong. It cannot be said that we are ‘refunding a surplus' to the taxpayers. In 2003, the tax cuts were accelerated to provide fiscal stimulus, but the economy now seems able to stand on its own two feet. Since the task at hand is now to bring the deficit under control, if Congress wants to extend these tax cuts as a matter of revenue policy, it should make every effort to do so in a deficit neutral manner. It also makes sense to use the loophole closings and fee extensions in the bipartisan plan to make up for the lost revenue of extending existing tax cuts before using them to help pass new tax cuts. It's a matter of setting priorities,” Bixby said.
The Concord Coalition is a nonpartisan, grassroots organization dedicated to balanced federal budgets and generationally responsible fiscal policy. Former U.S. Senators Warren Rudman (R-NH) and Bob Kerrey (D-NE) serve as Concord's co-chairs and former Secretary of Commerce Peter Peterson serves as president.